Activities
Began as Early as 2001 and Involved a Number of Elections, Including the 2010
Mayoral Contest in the District of Columbia
WASHINGTON—Eugenia C. Harris, the owner
of two businesses in the District of Columbia, pled guilty today to conspiring
to disguise the source of campaign contributions in federal and local
elections, including the 2010 District of Columbia mayoral campaign.
Harris, 75, of Washington, D.C., also
admitted taking part in steps to conceal the illegal activities. Among other
things, she admitted filing an amended tax return in December 2011 as part of
an effort to conceal her businesses’ involvement in funding hundreds of
thousands of dollars in campaign-related expenditures for the 2010 mayoral
campaign. In addition, she admitted to causing others to destroy a large volume
of records from her businesses because they could have revealed the extent of
her involvement in the mayoral election.
The guilty plea, in the U.S. District
Court for the District of Columbia, was announced by U.S. Attorney Ronald C.
Machen, Jr.; Ronald T. Hosko, Special Agent in Charge of the FBI Washington
Field Office’s Criminal Division; and Rick A. Raven, Special Agent in Charge of
the Washington Field Office of the Internal Revenue Service-Criminal
Investigation (IRS-CI).
Harris pled guilty to three charges: one
count of conspiring to violate federal campaign finance law and to obstruct
justice; one count of engaging in fraud and making false statements; and one
count of conspiring to violate District of Columbia campaign finance law. She
appeared before the Honorable Colleen Kollar-Kotelly. No sentencing date was
set. As part of her plea agreement, Harris agreed to cooperate in a continuing
investigation.
The federal conspiracy charge carries up
to five years in prison, a fine of up to $250,000 (or twice the gross gain or
loss from the offense), and other penalties. The fraud/false statements charge
carries up to three years in prison, a fine of up to $250,000, and other
penalties. The District of Columbia conspiracy charge carries up to six months
of imprisonment and a fine of up to $5,000. Under federal sentencing
guidelines, the parties have agreed that the applicable range for the offenses
is 30 to 37 months in prison and a fine between $6,000 and $60,000. In
addition, Harris has agreed to make restitution to the IRS for taxes, interest,
and penalties owed by herself and her businesses.
“Today’s guilty plea reveals a
decade-long scheme to circumvent federal and D.C. laws designed to prevent
money from corrupting our elections,” said U.S. Attorney Machen. “It also
confirms what many have feared: the 2010 election for D.C. mayor was tainted by
the infusion of massive sums of corporate money that were illegally concealed
from voters. This conviction begins to dismantle a conspiracy which for too
long subverted our federal and local electoral system.”
“Today, Ms. Harris took responsibility
for her role in a scheme designed to evade campaign finance laws by hiding the
true source of money provided to political candidates,” said Special Agent in
Charge Hosko. “Such illegal activity interferes with the fair electoral process
on which our representative democracy is based. Together with our law
enforcement partners, the FBI will continue to work to ensure that all those
who participate in corrupt schemes are held accountable for their actions.”
“The license to run a business is not a
license to engage in fraud,” said Special Agent in Charge Raven. “The
defendant’s misconduct of improperly deducting expenditures on her 2010
business income tax return was purely fraudulent. IRS-Criminal Investigation
uses their investigative and financial expertise to detect and hold accountable
individuals who carry out these types of fraudulent schemes.”
***
Framework
of the Scheme:
According to a statement of offense
signed by the government as well as the defendant, Harris owned and controlled
two businesses: Belle International Inc. and Details International Inc. both
located in an office building in Washington, D.C.
The statement of offense describes
Harris’s friendship and professional relationship with a person identified as
“Co-Conspirator #1,” who was the sole owner of “Company A” and the majority
owner of “Company B.”
According to the statement of offense,
starting as early as 2001, and continuing until at least December 2010, Harris,
Co-Conspirator #1, and others knowingly violated federal and D.C. campaign
finance laws.
The Federal Election Campaign Act
establishes limits on the amounts that individuals can contribute to individual
and multi-candidate political action committees. It also prohibits a person
from making a political contribution in the name of another person. The act
bars a person from reimbursing a donor who has already given to a candidate. In
addition, the law bans corporations from contributing money to candidates for
federal public office.
The District of Columbia Campaign
Finance Reform Act and Conflict of Interest Act similarly regulates financial
activity intended to influence the election of candidates for District of
Columbia office.
According to the statement of offense,
Harris and Co-Conspirator #1, aware of the finance limits, circumvented them by
funneling personal and corporate money to friends, family members, and
employees to make unlawful political contributions in various elections. Co-
Conspirator #1 promised to reimburse Harris for Harris’ own personal and
corporate contributions as well as those that Harris obtained from others.
Harris, in turn, promised others from whom she obtained contributions that
their contributions would be reimbursed.
2010
Mayoral Campaign:
The statement of offense describes
actions taken to channel contributions to the campaign of Candidate A, who was
among those running for mayor in the District of Columbia in 2010.
For example, Harris, Belle
International, and Details International each contributed $2,000 to Candidate
A. Harris, at the direction of Co-Conspirator #1, also obtained contributions
to Candidate A from family members, employees, and friends. Co-Conspirator #1
reimbursed Harris for the total $44,000 in campaign contributions, and Harris
repaid the family members, employees, and friends.
In addition, Harris and Co-Conspirator
#1, along with others, agreed to secretly fund other efforts to support the
election of Candidate A. They did not report these expenditures to the District
of Columbia Board of Elections and Ethics’ Office of Campaign Finance, which
administers and enforces laws pertaining to campaign finance.
Among other things, Harris and
Co-Conspirator #1 secretly funneled money that would be used for campaign
materials, consultants, and get-out-the-vote efforts. Co-Conspirator #1 caused
Company B to issue checks and wire payments to Belle International, one of
Harris’s companies, so that she could use her business to pay for campaign
expenses. The statement of offense lists five such checks, issued between July
and September 2010, that totaled $653,800 later used for services and materials
to elect Candidate A. These materials included many items bearing logos,
graphics, and designs identical to those used by the campaign.
In order to conceal the various
activities and account for them on the books of Co- Conspirator #1’s
businesses, Co-Conspirator #1 directed Harris to submit invoices to the
companies for the amounts needed for the reimbursements and campaign expenses.
Obstruction
of Justice:
In her guilty plea, Harris admitted that
she and Co-Conspirator #1 took steps to impede federal officials from obtaining
information concerning their involvement in conduit campaign contributions,
unreported political expenditures, and other activities. She admitted that she
did so while knowing that the U.S. Attorney’s Office for the District of
Columbia and the FBI were conducting a criminal investigation into allegations
involving the 2010 mayoral campaign.
Harris filed amended tax returns, for
example, in December 2011, as part of an effort to conceal the involvement of
Co-Conspirator #1 in funding hundreds of thousands of dollars in
campaign-related expenditures through Belle International to Candidate A, in
violation of District of Columbia law.
In addition, she caused others to shred
and destroy a large volume of paper records maintained by her businesses. She
also caused others to destroy stored electronic records from her businesses
because they could have revealed what took place in the mayoral election.
Finally, at the direction of Co-Conspirator
#1, Harris made arrangements in early 2012 to travel to Brazil for three months
in order to evade federal investigators. Efforts were made toward renting a
house in Brazil before the trip was cancelled.
***
In announcing the plea, U.S. Attorney
Machen, Special Agent in Charge Hosko, and Special Agent in Charge Raven
commended the work of those who investigated the case for the FBI and IRS-CI.
They also expressed appreciation for the work done by those who worked on the
case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Ellen
Chubin Epstein and Lionel Andre; Criminal Investigators Matthew Kutz, Mark
Crawford, and Melissa Matthews; Legal Assistants Krishawn Graham and Nicole
Wattelet; and Paralegal Specialist Shanna Hays.
Finally, they acknowledged the work of
Assistant U.S. Attorneys Jonathan Haray, Mary Chris Dobbie, and Loyaan Egal,
who are investigating and prosecuting this matter.
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